Tuesday, February 28, 2006

"Slight Price Increase Is Okay"

The Tale of Oil Money

Rumours of an increase in petrol and diesel prices were circulating in early February 2006. For the record, the price of fuel had increased 3 times since Pak Lah became Prime Minister - it is a record of sort for a Malaysian Prime Minister.

In July 31, 2005, petrol price went up 10 sens. in May 5th. 2005, it went up by 10 sens. In 1st October 2004, it went up 5 sens.

PM denies fuel price rise

It is not true. There will be no fuel price increase just yet, said Prime Minister Abdullah Ahmad Badawi in denying rumours that were circulating nationwide. “Rumours are never correct,” he said when asked by reporters on talk that petrol prices were going up by as much as 20 sen. He said no decision had been made on the matter.

PM says, some increase is OK!

Finally, 28th February, the news rocks Malaysian - 30 sens increase per liter!!!

What's going to happen? What would be the repercussions?

It will definitely forced all other industries to balance their cost via a price fluctuation of all goods and materials.

Hardest hit will be the middle income and lower income earners. The impact is not just fuel cost for their motor vehicles. The fuel price increase at a substantial 30 sens per litre is going to fire up inflation to a level that would be insidious to the economy in general and possibly cause widespread discontent and upsets.

This "courages" step by the government could have negative effect on the current administration. Added to this high increase in fuel price are other factors and uneasy news of the possible hike in electricity tariff, water tariff, assessment tax and local council taxes.

Domino Effect?


Datuk Mustapa Mohamad, the then Minister in the Prime Minister Department emphasized that diverting oil subsidies to development project would stand to benefit more people. In Mustapa words, Petronas is not set up to be a cash cow to benefit a few people but for everyone.

Will the reduce in subsidy benefit the whole spectrum or will it just be another of those things in life ... the price rakyat had to pay for ineffciency???!!!!